Tesla CEO Elon Musk has been in the news a lot for the past few weeks. Earlier he was in the news for buying a 9.2% stake in Twitter. With a 9.2% stake, Musk became the largest shareholder of Twitter. He now has four times more stake than Twitter founder Jack Dorsey who currently owns around 2.25% of the company. So Musk as you may know is the richest man in the world. He owns the car company Tesla and the aerospace company SpaceX. 

What made Musk buy Twitter which is a social media company? 

Elon Musk is a strong Twitter user. He keeps posting controversial Tweets that sometimes anger the American government, his investors, etc. Sometimes Twitter would delete his tweets. Musk noticed that Twitter did not allow people to express their thoughts and beliefs. He is a strong proponent of free speech. 

This is why he bought a stake in Twitter so that he could make changes in their policies and allow people to voice their opinions. The CEO of Twitter, Parag Agrawal has announced that Musk will remain the company's biggest shareholder and that the firm will be open to his suggestions. However these suggestions will be considered by the board of directors and not implemented immediately. The CEO said that the company said he can be a Board member but he can not own more than 14.9% of the company. Elon Musk refused. When he refused there were strong rumors that Musk did not want to limit himself to 14.9% stake and had the aim of buying more shares or maybe the entire company. Twitter had a market valuation of around $37 billion.

On 14th April, Elon Musk then made a shocking bid. He said that he is offering to buy Twitter in cash for $54.20/share. In total he is paying $43 billion. As soon as the news about Musk's offer got out, Twitter shares went up by 13%. Now if the market value of Twitter is $37 billion and Musk is offering to pay $43 billion - which means 6 billion extra - then Twitter should be happy right? They are in profit! However the board of directors were very hesitant to sell the company to Musk. It is because Musk had openly said he is going to make major changes in Twitter's policies which the board are not happy about. 

Take a look at some of Musk's proposals  

1. Musk tweeted that the salary of the board will be $0 if his takeover attempt succeeds. As the Pay cut will save Twitter $3 million per year. 

2. Twitter makes most of its money by advertisements. Musk said when he buys the company he would stop advertising. 

3. He said the company's headquarters in San Francisco should be converted into a homeless shelter as "no one shows up anyway." 

4. Musk said he would ensure people can say what they want and there would be no restriction on people’s speech. 

And there were many other points that Musk had proposed. This is why the board was hesitant to sell. Prior to Elon Musk, Last week, Saudi Arabian billionaire Prince  Alwaleed bin Talal, was the highest shareholder of Twitter. But he was beaten by Musk. Then Talal increased its stake in Twitter to 10.3% making him the biggest shareholder in the company. Talal denied Musk's offer by saying that the proposed offer is "not close to the value of Twitter given its growth prospects." Musk had said that if his offer was refused then he is not interested in keeping the 9.2% shares. He indirectly said that he would sell the shares. Selling such a large chunk of shares would mean the value of Twitter shares would fall drastically and lead to a huge loss to the company. After a lot of discussion the board of directors yesterday accepted Musk's bid and have decided to sell the Twitter company to him. 
 

Tags

• Twitter
• Elon
• Musk
• jack
• Dorsey
• take
• over

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